Which of the following price indices comes closest to measuring the cost of living of the typical household?
A) GDP deflator
B) producer price index
C) consumer price index
D) household price index
Answer: C
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Freedom of entry and exit in monopolistic competition
A) means that firms' price and average total cost of producing are always equal. B) never allows firms to earn economic profits. C) leads to falling prices when new firms enter the market. D) forces firms to abandon product differentiation but only in the long run.
How will a decrease in price affect a firm's revenues?
A) It depends on the price elasticity of demand. B) Revenues will stay the same. C) Revenues will decrease. D) Revenues will increase.
A production possibility graph slopes down because of:
a. the law of increasing costs. b. nonhomogeneous resources. c. inefficiency. d. improper output mix. e. unemployment.
What does it mean if the purchasing power in 1950 was 4.15 relative to the 1982 base year?
a. It took $4.15 in 1950 to buy what $1 bought in 1982. b. The average price level in 1982 was five times as high as in 1950. c. $4.15 in 1950 had the same nominal money value as $1 in 1982. d. It took $4.15 in 1982 to buy what $1 bought in 1950. e. Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed.